Question

Lucido Products markets two computer games: Claimjumper and Makeover. A contribution format income statement for a recent month for the two games appears below: Sales Clain jumper $ 112,000 27,880 $ 84.120 Makeover $ 56,000 5,720 $ 50,280 Variable expenses Contribution margin Fixed expenses Net operating income Total $168.000 33,600 134,400 88.32 5 46.880 Required: 1. What is the overall contribution margin (CM) ratio for the company? 2. What is the company's overall break-even point in dollar sales? 3. Prepare a contribution format income statement at the company's break-even point that shows the appropriate levels of sales for the two products Complete this question by entering your answers in the tabs below Required 1 Required 2 Required 3

Answer 1

1) Overall contribution margin for company is = (Total contribution margin/Total sales)*100 Overall contribution margin for company is = (134400/168000)*100 Overall contribution margin for company is = 80% 2) Overall break even point in dollar sales = Fixed cost/Overall contribution margin % Overall break even point in dollar sales = (88320/80%) Overall break even point in dollar sales = $ 110,400/. Total 3) Contribution format income statement :- Particulars Original sales % of Original sales of each product Claimjumper 1,12,000 66.67% Makeover 56,000 33.33% 1,68,000 100.00% 73,600 18,321 36,800 3,759 1,10,400 22,080 Sales at breakeven (Breakeven sales * %) Less: Variable expense (7360027880)/112000, (36800*5720)/56000 Contribution margin Less: Fixed expenses Net Operating Income 55,279 33,041 88,320 88,320